Heartland sees flat profit in 2013, announces special dividend

Heartland New Zealand, which expects to hear back on its banking licence application before Christmas, sees flat profit in the 2013 financial year and has announced a pre-Christmas special dividend.

The Auckland-based lender told shareholders at today's annual meeting net profit will probably be between $21 million and $24 million in the year ending June 30, 2013. That compares to annual profit of $23.6 million in the 2012 year.

That profitability represents a 45% to 66% improvement in pre-tax profit and depends on asset growth, lower cost of funds from a successful bank registration, a focus on costs and charges on impaired assets staying at current levels, Heartland saysin its AGM presentation published on the stock exchange.

The company's board also declared a 1.5 cents per share special dividend, with a record date of December 14, payable on December 21.

Directors gave no details on future dividend policy, saying only that payouts would be based dividends on its after-tax profit, subject to maintaining a prudent level of capital.

"Heartland's capital needs will vary from time to time, depending on a range of factors (including regulatory and credit rating requirements, general economic conditions, current and expected growth and the mix of business)," the company says in a statement.

The shares rose 1.5% to 69 cents and have rallied 43% this year. The stock is rated an average "outperform", based on two analyst recommendations compiled by Reuters with a median target price of 65 cents.

Heartland was formed through the merger of Pyne Gould's Marac Finance unit with the Canterbury and Southern Cross building societies, with a view to securing a banking licence in a shift away from a new regulatory regime that imposed stricter conditions on non-bank financial institutions.

Last month Heartland had its investment grade BBB- credit rating affirmed with a stable outlook by Standard & Poor's, which cited the lender's strength as very strong capital and earnings assessment, good geographic and business diversity, and sticking to its timeline for its post-merger plan.

(BusinessDesk)